Netflix Takes on $2 Billion in Debt in Quest to Beat Disney

IndieWire | 10/21/2019 | Staff
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While WarnerMedia, Apple, and NBCUniversal are all prepping to launch their own streaming services, Netflix executives in their recent Q3 earnings call pointed to a single rival, Disney, as the one to beat in the battle for creating lasting “moments of joy” for streaming subscribers. It’s bound to be a tough fight — Disney birthed “the happiest place on Earth,” after all.

On Monday, Netflix said it would be taking on an additional $2 billion in debt to give them the edge over the entertainment behemoth, and analysts say it is a wise investment.

Time - Year - Netflix - Amount - Debt

It’s the second time this year Netflix is taking on that amount in debt, earmarked for production and development, acquisitions, and other capital needs. The company has needed to take on debt as part of the transition from a digital rerun destination into an original content powerhouse, a change that began in 2013 with “House of Cards.” Netflix is on track to spend a total $15 billion on movies and TV this year.

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In 2020, the company will work to reverse its cash-burning, CFO Spencer Neumann said in last week’s earnings call. He noted that while spending on content is increasing, the company’s revenue is growing faster; it added 6.8 million subscribers worldwide last quarter.

Operations - Debt - Years - Jeff - Wlodarczak

“They will need to fund their operations with debt for at least the next three years,” said Jeff Wlodarczak, principal of Pivotal Research Group, who forecasts growth in the company’s free cash flow — the amount left over after spending on content and operating expenses....
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